Sunshine Week and Corruption

Sunshine Week and Corruption

This week is Sunshine Week, Mar 15-21, 2015. I've had a number of conversations with people who have bandied about the word corrupt as in the system is corrupt.  It normally means that an official is or is thought to be taking money or making money under the table deals, but it seems to have blossomed into a word that means that officials, the agency and more broadly the system doesn't serve the people or citizens.  They serve themselves. They hide in a bureaucracy of rules  

The antidote is sunshine; another word is transparency, ensuring that the public has information available simply because officials are conducting public business.  This week, Sunshine Week (Mar 15-21) promotes this idea.  Our town and city officials are very much aware of the their responsibilities under the Maine Freedom of Access Act through training provided at various MMA and Town, City, and County sponsored meetings and workshops.  If you have ever received an email from any town official, it states that the email is likely to be a public record.  Maine law makes almost all meetings public and all records public, even drafts of minutes of a meeting.  As one might expect there are some exceptions; an employee evaluation and disciplinary actions except the final written decision.  

The legislation, although comprehensive, needs to be reviewed periodically as we move from one new technology to the next.  Just as we receive Emergency Management push notifications of missing children, schools have begun to use push notifications to let parents know about school closings. These parent phone numbers are probably confidential but emails may or may not be confidential. 

Many organizations are putting more and more information on the web giving us greater access but right now our Freedom of Access Act is passive.  It limits the destruction of records but still puts the burden on the citizen to request rather than making it public policy for communities and schools to easily make available information.  The actions of the Governor of New York shutting down a commission to investigate corruption when it got too close to his allies and his office, explains why we need to be more active use of the newest technologies to communicate with citizens.  More eyes creates participation. A commission is after the fact when the perception or corruption has already occurred.  Gone are the days when involvement in government is reading the newspaper.  governments need to maximize their connections to citizens.  Then we can hope that the meaning of corruption will not expand.

Taxing Nonprofits

As we begin the budget debate here in Maine Governor LePage has put out a plan to gradually reduce the income tax by, among other things, allowing communities to levy the  property tax on    large nonprofits and eliminating revenue sharing to communities.  What is probably ideological is his desire to reduce income tax in favor of an increased sales, renamed consumption tax, and a return to more taxing at the local level.  What is probably not an ideological, but pragmatic, is the search for new goods, services, and now properties to tax. 

For both nonprofits and local communities this raises all sorts of implications.  As it is now, some nonprofits pay sales taxes when they purchase goods, others do not.  Maine exempts large swaths of nonprofits form paying sales tax, primarily in the heath area, hospitals and clinics, but not educational health organizations;  churches; schools; and nonprofit fire departments, for example.  Nonprofits also pay property taxes and income taxes on businesses in which they make a profit.  Usually these businesses are established to feed back funds into the nonprofit and are common in healthcare.   The medical lab of Eastern Maine Healthcare is for profit to support the hospital as a whole.

Nonprofits will want to defend themselves, by citing aggregate services they provide to the economy, jobs they provide and services they provide that government does not have to provide.  This will not be enough.  This argument could be made by for profits as well, and libertarians would go so far as to say that businesses should not be taxed at all because they are the job creators.  Most of us, however, are more pragmatic and see it as necessary to levy taxes on businesses and some nonprofits.

The difference has to be in how nonprofits convey what they do with greater transparency.  As a member of my community's warrant committee, each year we ask nonprofits who are requesting a donation from the town to provide basic financial figures and the number of persons served and any subsidies to community members.

This should not be hard to find in the days of the internet, yet it often is.  In fact, many nonprofits don't even identify themselves as nonprofit on their websites.  In a study I conducted of Indiana nonprofit websites (excluding hospitals, but not clinics), a little over half,  53%, identified  themselves as a nonprofit by using such words as nonprofit, non-profit, not-for-profit, nonprofit, charity, 501c3 (an IRS identification of a nonprofit), 990 (the form that nonprofits must send to the IRS), or tax-exempt. 

Hospitals have one more obligation: they must provide a community benefit form, to the public and IRS, in order to retain their nonprofit status.  Community benefits include subsidized health care, unreimbursed costs, and patient and community health education.  These reports may not be enough if we can't easily distinguish whether a hospital is for profit or nonprofit.  Educational institutions are under no such similar obligation and we often call these large institutions, private, think of Bates, Bowdoin, and Colby, to distinguish them from our state educational institutions.  They, too, will need to be more transparent in what community benefits they provide in lieu of property taxes. 

I will discuss nonprofit transparency further in a coming blog.

Taxing Nonprofits

As we begin the budget debate here in Maine Governor LePage has put out a plan to gradually reduce the income tax by, among other things, allowing communities to levy the  property tax on    large nonprofits and eliminating revenue sharing to communities.  What is probably ideological is his desire to reduce income tax in favor of an increased sales, renamed consumption tax, and a return to more taxing at the local level.  What is probably not an ideological, but pragmatic, is the search for new goods, services, and now properties to tax. 

For both nonprofits and local communities this raises all sorts of implications.  As it is now, some nonprofits pay sales taxes when they purchase goods, others do not.  Maine exempts large swaths of nonprofits form paying sales tax, primarily in the heath area, hospitals and clinics, but not educational health organizations;  churches; schools; and nonprofit fire departments, for example.  Nonprofits also pay property taxes and income taxes on businesses in which they make a profit.  Usually these businesses are established to feed back funds into the nonprofit and are common in healthcare.   The medical lab of Eastern Maine Healthcare is for profit to support the hospital as a whole.

Nonprofits will want to defend themselves, by citing aggregate services they provide to the economy, jobs they provide and services they provide that government does not have to provide.  This will not be enough.  This argument could be made by for profits as well, and libertarians would go so far as to say that businesses should not be taxed at all because they are the job creators.  Most of us, however, are more pragmatic and see it as necessary to levy taxes on businesses and some nonprofits.

The difference has to be in how nonprofits convey what they do with greater transparency.  As a member of my community's warrant committee, each year we ask nonprofits who are requesting a donation from the town to provide basic financial figures and the number of persons served and any subsidies to community members.

This should not be hard to find in the days of the internet, yet it often is.  In fact, many nonprofits don't even identify themselves as nonprofit on their websites.  In a study I conducted of Indiana nonprofit websites (excluding hospitals, but not clinics), a little over half,  53%, identified  themselves as a nonprofit by using such words as nonprofit, non-profit, not-for-profit, nonprofit, charity, 501c3 (an IRS identification of a nonprofit), 990 (the form that nonprofits must send to the IRS), or tax-exempt. 

Hospitals have one more obligation: they must provide a community benefit form, to the public and IRS, in order to retain their nonprofit status.  Community benefits include subsidized health care, unreimbursed costs, and patient and community health education.  These reports may not be enough if we can't easily distinguish whether a hospital is for profit or nonprofit.  Educational institutions are under no such similar obligation and we often call these large institutions, private, think of Bates, Bowdoin, and Colby, to distinguish them from our state educational institutions.  They, too, will need to be more transparent in what community benefits they provide in lieu of property taxes. 

I will discuss nonprofit transparency further in a coming blog.